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One for the gold bulls. Are there still gold deposits in SA worth finding?

February 11, 2015

Since the late 1800s, more than 1.6 billion ounces of gold have come out of the Witwatersrand deposit in South Africa. There is still plenty of gold down there, but it’s becoming more and more difficult to get out.

There are however still people who believe that there are exploitable resources that have yet to be found. One of them is Australian prospector and one of that country’s most successful entrepreneurs, Mark Creasy.

Creasy made his fortune discovering gold deposits in his home country and still spends millions of dollars every year on exploration. Some of that money is being spent in South Africa.

He is the majority shareholder and sole funder of White Rivers Exploration, which is currently investigating more than a dozen projects, mostly in the Wits basin.

The company currently holds 3 250km2 of prospecting rights, which makes it the largest gold explorer in the region. Its focus is on gold with uranium as a by-product, but it has also discovered deposits of a range of other commodities such as coal, manganese and coal bed methane gas.

The most interesting discovery to date is at its Beisa project just north of Welkom, which borders Harmony Gold’s Target mine. Towards the end of last year White Rivers entered into a joint venture (JV) with Harmony to confirm the potential of the project and ultimately to mine it.

Speaking on the fringes of the 2015 Mining Indaba, executive chairman Neil Warburton said that they anticipate that Beisa will go into production in about four years’ time.

“The initial JORC code-compliant resource estimation will be completed by October this year,” he said. “We anticipate that the resource will amount to between six to ten million ounces of gold at good grades.”

The shareholding in the JV is currently weighted 65% to White Rivers and 35% to Harmony, with White Rivers funding the exploration activities up to pre-feasibility. Once a Decision to Mine is approved, following a successful bankable feasibility, the shareholding in the JV will switch to 51% to Harmony and 49% to White Rivers. Harmony will allow the JV to use its neighbouring Target Mine infrastructure and will be responsible for the actual mining activities.

“Once the resource is estimated in October, the plan is also for White Rivers to either list on the London Stock Exchange or another international exchange, with a secondary listing in Johannesburg,” Warburton said.

The big benefit of the JV is that there will be no need to sink another shaft in order to access the resource. Harmony’s Target shaft that is already in place can be used for the purpose.

This implies that capital expenditure for the project will be relatively low, opening up the potential for significant returns on capital employed. It also means that the time to mining the resource is significantly reduced.

Warburton added that they have enjoyed a good relationship with government, which has been an enabler for the project.

“Fortunately White Rivers has very good, proactive BEE partners and that makes dealings with the Department of Mineral Resources less cumbersome,” Warburton says. “We have to say that we have received good support from government.”

He also pointed out that their primary investor takes a long-term investment view and therefore the current challenges in the local mining industry are viewed through that lens.

“Creasy has been a gold bull all of his life and he has confidence in South Africa,” Warburton said. “His dream is still to discover another mine in South Africa, and White Rivers is on the verge of doing exactly that.”